Banking on cronyism
Although it has not exactly hit mainstream status as a hot-button political issue, the United States Export-Import Bank has taken a ponderous course to perhaps emerging as a prime sleeper subject coming into election season.
The bank, which provides government loans and loan guarantees to foreign customers of American exporters, will see its charter expire on September 30 if not reauthorized by a vote of Congress. This vote, sadly like a lot of business in Washington, has become a routine motion gone through every couple of years over the 80 year history of the institution.
As to whether or not Ex-Im, as it is universally known, should be allowed to expire, that's increasingly becoming a question of the moment, popping up in senate and congressional races in Iowa, North Carolina, and Louisiana. Surprisingly enough, Senate Minority Leader Mitch McConnell is against renewal of Ex-Im, in spite of his endorsement by the U.S. Chamber of Commerce (which is heavily in favor of renewal).
But even in the face of growing criticism, and questions of accountability after four Ex-Im officials were removed following an investigation into corruption, the bank still has its defenders, with President Obama a surprising head of the list.
That the President is at the head of the list is surprising because before he was for it, he was against it. As a candidate in September 2008, Obama said:
There are some programs that have been duplicated by other programs that we just need to cut back, like waste at the Economic Development Agency and the Export-Import Bank that's become little more than a fund for corporate welfare.
So how, in a mere six years, did Barack Obama go from railing against Ex-Im to holding hands with the U.S. Chamber of Commerce, hardly a typical Obama ally? Whole bunch of good questions, right there.
The simple answer- to have them tell it, is jobs, jobs, jobs. From President Obama and the U.S. Chamber to the AFL-CIO and the National Association of Manufacturers, the Ex-Im by itself supports over 200,000 jobs a year. At a June 2014 hearing on Ex-Im, Rep. Carolyn Maloney (D-NY) entered into the record a letter of support from 865 businesses and organizations, saying "this many businesses can't be wrong."
Maybe so, but then again, what in the hell makes her think the 865 businesses are necessarily right?
Among the bank's top clients are General Electric, Caterpillar, Bechtel, and Boeing. Especially Boeing. I'm not going to say Ex-Im and Boeing are going steady or anything, but Boeing's business amounted to over 87% of Ex-Im's loans in 2013, and this is in spite of Boeing bringing in $86.6 billion in revenue that same year.
That, in essence, sums up the burgeoning image problem Ex-Im is developing. People are starting to pay attention and do the math.
In Fiscal Year 2013, Ex-Im provided financing or guarantees for $37.4 billion in U.S. Exports. Getting beyond the notion that is just another $37.4 billion the U.S Treasury and subsequently the taxpayers are on the hook for if there should unfortunately happen to be difficulty in the repayment of a loan, a full one-fifth of this goes to credit insurance to protect the exporting company in case the customer does not pay. That's a good $7.5 billion helping the hell out of the insurance companies, not really doing us a lot of good.
Not to mention, Boeing comes off looking like geniuses. $32 billion in subsidized business, and all they had to do was donate $170,000 to Obama's reelection bid in 2012 and $200,000 in 2008. Kind of an interesting tidbit to me that Boeing donated more money when Obama was against Ex-Im. Also, the company's President & CEO, Jim McNerney, serves as chairman of the President's Export Council.
Besides the obvious influence peddling going on, what we have is a government bank providing below-market loans to companies, at the expense of their competition, who are not getting (not that they necessarily should be receiving) the same assistance. It is benefiting foreign nations over our own, and just because those foreign nations place export subsidies on their native companies. Our government just did the same thing, because that'll show them. Add in the vast, overwhelming, runaway, majority of Ex-Im's funding going to large corporations, and not only is the U.S. Export-Import Bank crony capitalism, but it's the worst kind, and in its purest form.
In a short matter of time, the U.S. Export-Import Bank has gone from Democratic campaign rhetoric to libertarian sore spot to sudden sleeper cause by libertarian, Republican, and Tea Party-backed candidates, now putting the Democrats on the defensive. In his article Ex-Im Exit on Slate, David Weigel posits that even if Ex-Im is once again reauthorized, "the Kochs and libertarians will have won the rhetorical battle, having put the onus of defending "crony capitalism" on Democrats."
If only. Libertarians are used to winning rhetorical battles, but the spoils of those victories really aren't all that when nothing is invariably done to correct the problems raised by the rhetorical battle. The real onus should and has to be placed squarely on both Democrats and Republicans, not only for taking a bad idea and running with it for 80 years, but for pocketing tons of campaign cash from companies while they were at it and barely wiping their mouths when they were done.
The Republicans and Democrats- you know, the two-party system we keep hearing about, they both need to man up, sit down, and ignore Ex-Im as hard as they possibly can. Then again, given Congress' autopilot feature has been fully engaged with no course plotted for the past three or four years (last time around, Ex-Im was reauthorized by a final vote of 330-93), that might be more of the optimism over results side effect of two-party rhetoric.
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